Net sales of Revlimid, the key growth driver at Celgene, came in
at $1.14 billion, reflecting an increase of 13% over the year-ago
period. The drug did well both in the U.S. (up 15%) and
international markets (up 11%). Market share gains and increased
duration of therapy drove sales in the fourth quarter of 2013.

Net sales of another cancer drug, Abraxane, jumped 90% to $202
million. The drug did well both in the U.S. (up 89% to $159
million) and international markets (up 92% to $43 million). Sales
in the U.S. were boosted by the label expansion of the drug into
the non-small cell lung cancer indication in the final quarter of
2012 and the pancreatic cancer indication in Sep 2013.

Net sales of Vidaza declined 22% to $168 million. Soft U.S. sales
(down 70%) due to generic competition hurt results during the
quarter. We note that
Dr. Reddy's Laboratories Ltd.
(
RDY
) gained U.S. approval to market its generic version of the drug
in Sep 2013.

U.S. sales of Pomalyst, approved by the U.S. Food and Drug
Administration (FDA) in Feb 2013 in combination with low-dose
dexamethasone for the treatment of relapsed and refractory
multiple myeloma patients, who have received at least two prior
therapies, came in at $89million in the fourth quarter of 2013,
up 15.5% sequentially.

The approval of the drug (trade name: Imnovid) in the EU in Aug
2013 has further boosted its sales potential. Sales of the drug
in international markets were $32 million in the final quarter of
2013 as opposed to $13 million in the preceding quarter.

Net sales of another cancer drug, Thalomid, continued to decline
due to the availability of better alternatives. Thalomid sales
were $61 million, down 16%.

Research and development (R&D) expenses (excluding
stock-based compensation and other special items) climbed 44.7%
to $460 million. The increase was due to Celgene's efforts to
develop its pipeline along with collaboration payments. Selling,
general and administrative expenses (excluding stock-based
compensation and other special items) in the quarter increased
17.6% to $400 million. Costs associated with the launches of
Abraxane in the pancreatic cancer indication, Pomalyst/ Imnovid
led to the rise in SG&A expenses. Costs associated with the
anticipated launch of apremilast (proposed brand name: Otezla)
also pushed up SG&A costs.

Outlook for 2014 Maintained

Celgene re-affirmed the guidance provided by it on Jan 13, 2014.
Total revenues in 2014 are projected to increase 15% year over
year to $7.5 billion (in line with the Zacks Consensus Estimate)
driven by strong product sales.

Net product sales are expected to grow 16% in 2014 to $7.3-$7.4
billion. Revlimid is expected to be the major contributor with
2014 sales expected in the range of $4.9-$5.0 billion, up 16%.
Celgene expects 2014 earnings (excluding stock-based compensation
and other special items) in the range of $7.0-$7.20 per share.
The Zacks Consensus Estimate currently stands at $6.49 per share.

Our Take

We are impressed by the strong sales of the key cancer products
at Celgene in the final quarter of 2013. We expect Celgene
to easily achieve its forecast for 2014 driven by its strong
product portfolio.

We are also impressed by Celgene's efforts to develop its
pipeline. We expect 2014 to be a data rich year for the company.
Management at Celgene is highly bullish on the prospects of its
pipeline candidate apremilast. The candidate is under review in
the U.S. for the psoriatic arthritis indication (target date: Mar
21, 2014).The candidate is also expected to be approved in the
U.S. for psoriasis in 2014 (target date: Sep 23, 2014). Celgene
is also seeking EU approval for the candidate in the combined
psoriasis and psoriatic arthritis indication. The European
Committee for Medicinal Products for Human Use (CHMP) is expected
to render its opinion by Dec 31, 2014.

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